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How are wages set in Beijing

  • José De Sousa

    ()

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)

  • Sandra Poncet

    ()

    (Axe Développement et mondialisation - CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)

China's export performance over the past fifteen years has been phenomenal. Is this performance going to last? Wages are rising rapidly but a population in excess of one billion represents a large reservoir of labor. Firms in export-intensive provinces may draw on this reservoir to increase competition in their labor market and keep wages low for many years to come. We develop a wage equation from a New Economic Geography model to capture the upward pressure from national and international demand and downward pressure from migration. Using panel data at the province level, we find that migration has moderately slowed down Chinese wage increase over the period 1995-2007.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00633752.

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Date of creation: 2011
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Handle: RePEc:hal:cesptp:hal-00633752
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